view from the fund manager's office
Long view and ability to identify potential key for equity investing
Fund managers should not be so quick to dismiss firms that do not scream instant returns
As a fund manager I am often asked about the recent poor performance of equities. Increased political risks, low investor confidence and a likely further credit ratings downgrade have left investors concerned they will no longer get the return from equities they have experienced over the past five years. As investing in equities is my favourite pastime, and we as a team spend numerous hours with the management teams of SA’s top companies, I can talk about this for hours. The JSE all share index’s (Alsi’s) average annual growth rate over the past two and a half years has been a mere 2.3%, well below consumer inflation of 5.5% over the same period. In contrast, over the past five years the Alsi has risen by an annual average of 10.1%, excluding dividend receipts, or 14% including dividends. This more than beats inflation of 5.7% over this period. The recent underperformance of the domestic market does not mean investors should flock offshore or into other asset classes. There are stil...
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